Foreign banks’ Korean earnings up 6% on higher securities income

The net interest margin declined from 0.75% to 0.63%, according to official data.

The 33 branches of foreign banks operating in South Korea (excluding Credit Suisse) earned about $1.15b (KRW1.55t) in net income for 2023, 6% higher than the previous year.

Whilst interest income decreased 18.7% or a $204.4m (KRW283.8b) decline during the period, non-interest income more than made up for this with a 41.7% rise to a combined rise of $411.4m (KRW551b), according to data released by the Financial Supervisory Service (FSS).

Interest income of foreign bank branches in Korea came in at $918.36m (KRW1.23t) in 2023. Interest-bearing assets decreased by $2.09b (KRW2.8t), and the net interest margin declined from 0.75% to 0.63%, data showed.

In contrast, securities income expanded to $769.03m (KRW1.03t) during the same year. 

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“In particular, market interest rates declined at the end of 2023, and this contributed to greater fixed income trading and valuation gains,” the FSS wrote in its report.

FX/derivatives-related income decreased 61.8% in 2023 to $754.1m (KRW1.01t).

Selling, general and administrative expenses jumped 15.1%.

The FSS says that it is possible for volatility in financial markets to increase given uncertainty about the timing of the Fed pivot, and amidst signs of economic slowdowns both in South Korea and abroad.

(US$1 = KRW1,339.35; as of 20 March 2024, 2:20 PM)